Quality Watches completed the following selected transactions during 2016 and 2017: 2016 Dec. 31 Estimated that bad debts expense for the year was 1% of credit sales of $420,000 and recorded that amount as expense. 31 Made the closing entry for bad debts expense

. 2014 Jan. 17 Sold merchandise inventory to Malcolm Monet, $400, on account. Ignore cost of goods sold. Jun. 29 Wrote off Malcolm Monets account as uncollectible after repeated efforts to collect from him. Aug. 6 Received $400 from Malcolm Monet, along with a letter apologizing for being so late. Reinstated Monets account in full and recorded the cash receipt. Dec. 31 Made a compound entry to write off the following accounts as uncollectible: Brian Kemper, $1,500; May Milford, $1,200; and Ronald Richter, $500. 31 Estimated that bad debts expense for the year was 1% on credit sales of $520,000 and recorded the expense. 31 Made the closing entry for bad debts expense.

Requirements 1. Open T-accounts for Allowance for Bad Debts and Bad Debts Expense. Keep running balances, assuming all accounts begin with a zero balance.

2. Record the transactions in the general journal, and post to the two T-accounts.

3. Assume the December 31, 2017, balance of Accounts Receivable is $138,000.Show how net accounts receivable would be reported on the balance sheet at

that date.